Nickel recovers

Copper eked out gains on Friday, underpinned by a strong demand outlook and concerns over longer term supplies, while nickel recovered from a two-year low. Aluminium held firm on the back of historically high energy prices, despite bearish near term fundamentals - namely plentiful stocks of the metal used in packaging, transportation and power.
Copper for three months delivery on the London Metal Exchange closed at $8,180 per tonne against $8,130 on Thursday. Earlier it touched $8,040 a tonne, its lowest in more than a week. "Copper has really left an impetus to move higher," said Merrill Lynch metals strategist Daniel Hynes, citing the market's recent rangebound trading pattern.
"Although the downside is limited due to the ongoing supply issues that we've seen so far this year and looks unlikely to dissipate in the near term as well," he added.
The metal, seen as a guage of economic activity, had come under selling pressure on Thursday because of the firmer dollar, worries about slow near term demand from China and rising stocks, up more than 10 percent this month to around 125,000 tonnes.
Aluminium ended at $3,002 a tonne from $3,000 on Thursday. Prices of the metal were expected remain firmly underpinned by rising energy costs as electricity accounts for one-third of the costs of smelting aluminium.
An increasingly strained power grid in China, the world's biggest consumer and producer, was seen hindering future growth in the country's aluminium production, analysts said. Nickel fell more than 8 percent on Thursday and another 5 percent early on Friday before rebounding on a firm fundamental outlook for the metal used to make stainless steel.
Nickel closed at $24,100 a tonne, up from an earlier session low of $22,350 and $23,500 on Thursday. The metal has come under pressure in recent months on depressed stainless steel demand and expectations of growing supplies.
BHP Billiton Ltd said its Ravensthorpe nickel mine in western Australia, one of the largest nickel making facilities in the world, will reach its full capacity of 50,000 tonnes a year by 2010. However, sharply higher coke costs have driven up prices of the Zinc was at $2,145 a tonne from $2,110 on Thursday.
Some analysts said renewed production in earthquake-hit China aimed the market towards a level of $2,000 or less, but others saw less downside risk. Lead was almost unchanged at $2,009 a tonne versus $2,010 on Thursday. Rising stocks of lead, up nearly 40 percent to about 65,000 tonnes since the beginning of this year have hit sentiment. Tin, which hit a record-high of $25,450 per tonne earlier this month, closed at $23,750 per tonne from $23,700/23,800 on Thursday.